Stock prices and demand for money in China: new evidence.
This paper investigates the relationship between stock prices and the real money demands for China within a cointegrated framework. This study reports two important results. First, test results reveal that a stable long-term relationship exists between broad money (M2) and its determinants including...
| Main Authors: | , , |
|---|---|
| Format: | Article |
| Language: | English English |
| Published: |
2009
|
| Subjects: | |
| Online Access: | http://psasir.upm.edu.my/id/eprint/16849/ http://psasir.upm.edu.my/id/eprint/16849/1/Stock%20prices%20and%20demand%20for%20money%20in%20China.pdf |
| _version_ | 1848843076775182336 |
|---|---|
| author | Baharumshah, Ahmad Zubaidi Mohd, Siti Hamizah Yol, Marial Awou |
| author_facet | Baharumshah, Ahmad Zubaidi Mohd, Siti Hamizah Yol, Marial Awou |
| author_sort | Baharumshah, Ahmad Zubaidi |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper investigates the relationship between stock prices and the real money demands for China within a cointegrated framework. This study reports two important results. First, test results reveal that a stable long-term relationship exists between broad money (M2) and its determinants including real income, foreign interest rate, and stock prices. Second, stock prices have a significant substitute (positive) effect on long-run broad-money (M2) demand and its omission can lead to serious misspecification in the money demand function in both the short- and long-run. Finally, we demonstrate that long-run income elasticity is not significantly different from unity with the inclusion of stock prices in the money demand equation. |
| first_indexed | 2025-11-15T08:09:17Z |
| format | Article |
| id | upm-16849 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English English |
| last_indexed | 2025-11-15T08:09:17Z |
| publishDate | 2009 |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-168492015-09-03T03:04:11Z http://psasir.upm.edu.my/id/eprint/16849/ Stock prices and demand for money in China: new evidence. Baharumshah, Ahmad Zubaidi Mohd, Siti Hamizah Yol, Marial Awou This paper investigates the relationship between stock prices and the real money demands for China within a cointegrated framework. This study reports two important results. First, test results reveal that a stable long-term relationship exists between broad money (M2) and its determinants including real income, foreign interest rate, and stock prices. Second, stock prices have a significant substitute (positive) effect on long-run broad-money (M2) demand and its omission can lead to serious misspecification in the money demand function in both the short- and long-run. Finally, we demonstrate that long-run income elasticity is not significantly different from unity with the inclusion of stock prices in the money demand equation. 2009 Article PeerReviewed application/pdf en http://psasir.upm.edu.my/id/eprint/16849/1/Stock%20prices%20and%20demand%20for%20money%20in%20China.pdf Baharumshah, Ahmad Zubaidi and Mohd, Siti Hamizah and Yol, Marial Awou (2009) Stock prices and demand for money in China: new evidence. International Financial Markets, Institutions and Money, 19 (1). pp. 171-187. Stock - Prices - China. Demand for money - China. Monetary policy - China. English |
| spellingShingle | Stock - Prices - China. Demand for money - China. Monetary policy - China. Baharumshah, Ahmad Zubaidi Mohd, Siti Hamizah Yol, Marial Awou Stock prices and demand for money in China: new evidence. |
| title | Stock prices and demand for money in China: new evidence. |
| title_full | Stock prices and demand for money in China: new evidence. |
| title_fullStr | Stock prices and demand for money in China: new evidence. |
| title_full_unstemmed | Stock prices and demand for money in China: new evidence. |
| title_short | Stock prices and demand for money in China: new evidence. |
| title_sort | stock prices and demand for money in china: new evidence. |
| topic | Stock - Prices - China. Demand for money - China. Monetary policy - China. |
| url | http://psasir.upm.edu.my/id/eprint/16849/ http://psasir.upm.edu.my/id/eprint/16849/1/Stock%20prices%20and%20demand%20for%20money%20in%20China.pdf |